Ukraine launches 5% state-backed leasing scheme for defence manufacturers

Ukraine’s Cabinet of Ministers has introduced a new state-backed financial support mechanism for defence industry companies through financial leasing agreements. The regulation was drafted by the Ministry of Defence.

Defence industry enterprises classified as critically important will be able to pay just 5% annual interest under leasing contracts, with the remaining financing costs covered by the state budget. The preferential leasing scheme may be used for projects related to the development, production, repair, modernisation and disposal of weapons, military and special-purpose equipment, as well as ammunition. This includes the purchase and upgrading of equipment and technological assets, transport for production and commercial needs, and non-residential property for business operations.

Financial support will be provided through authorised lessors — banks and leasing companies that meet the criteria set out in the regulation and introduce the required internal products. The Ministry of Defence will announce separately which institutions will offer preferential leasing services to defence industry companies.

The scheme sets a cap of up to UAH 500 million per contract, with a maximum lease term of five years. The base remuneration for the lessor may not exceed 23% per annum, while the one-off service fee is limited to 0.75% of the total financing amount.

Earlier, Defender Media reported on the criteria used by the Ministry of Defence to designate defence industry enterprises as critically important.